JDS.L Regulatory News (JDS)

To: Business Editor 2nd August 2019

For immediate release

Jardine Cycle & Carriage Limited

2019 Half Year Financial Statements and Dividend Announcement

The following announcement was issued today by the Company's 75%-owned subsidiary, Jardine Cycle & Carriage Limited.

For further information, please contact:

Jardine Matheson Limited

Jonathan Lloyd (852) 2843 8223

Brunswick Group Limited

Ben Fry (65) 6426 8103

2nd August 2019

JARDINE CYCLE & CARRIAGE LIMITED

2019 HALF YEAR FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

·; Underlying profit modestly down

·; Lower contribution from Astra primarily due to a weaker automotive market

·; Direct Motor Interests affected by increased competition in Vietnam

·; Improved Other Strategic Interests contribution due to higher dividend income

"Jardine Cycle & Carriage reported underlying profit of US$407 million, reflecting the challenging conditions in the first half of 2019. The outlook for the rest of the year remains cautious, with Astra expected to continue to face a soft automotive market and commodity prices. The Group's Direct Motor Interests will also continue to be affected by challenging market conditions, while the contribution from Other Strategic Interests is expected to be stable."

Ben Keswick, Chairman

The exchange rate of US$1=S$1.35 (31st December 2018: US$1=S$1.37) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.36 (30th June 2018: US$1=S$1.33) was used for translating the results for the period. The financial results for the six months ended 30th June 2019 and 30th June 2018 have been prepared in accordance with International Financial Reporting Standards and have not been audited or reviewed by the auditors.

† The accounts have been restated due to changes in accounting policies upon adoption of IFRS 16 Leases, as set out in Note 1 to the condensed financial statements.

# The Group uses 'underlying profit attributable to shareholders' in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in Note 4 to the condensed financial statements. Management considers this to be a key performance measurement which enhances the understanding of the Group's underlying business performances.

^ Included in 'non-trading items' are unrealised gain/losses arising from the revaluation of the Group's equity investments.

* The Singapore currency equivalent is an estimate as the actual amount will be determined on the Books Closure Date referred to in Note 11.

nm not meaningful

CHAIRMAN'S STATEMENT

Overview

Jardine Cycle & Carriage's ("JC&C" or "the Group") performance in the first half reflected the challenging conditions in the period, with Astra's performance affected by relatively weak domestic consumption and a downward trend in commodity prices, only partially offset by improved contributions from financial services and gold mining.

Results

JC&C's underlying profit attributable to shareholders of US$407 million was 1% lower than the same period last year. Underlying earnings per share were also down 1% at US¢103. Profit attributable to shareholders increased significantly compared with the same period in 2018 to US$427 million, after accounting for net non-trading gains of US$20 million which were principally unrealised fair value gains related to non-current investments. In 2018, there were net non-trading losses of US$240 million. Earnings per share were US¢108, compared with US¢44 last year.

The Group's consolidated net debt, excluding Astra's financial services subsidiaries, was US$3.1 billion at the end of June 2019, compared to US$2.2 billion at the end of 2018. The increase was largely due to Astra's additional investments in the Surabaya-Mojokerto toll road and Gojek, as well as capital expenditure in its mining contracting business, and additional investment by JC&C in Truong Hai Auto Corporation. Net debt within Astra's financial services subsidiaries increased from US$3.3 billion to US$3.4 billion. JC&C parent company's net debt was US$1.5 billion, compared with US$1.3 billion at the previous year end.

The Board has declared an interim one-tier tax exempt dividend of US¢18 per share (2018: US¢18 per share) for the half year ended 30 June 2019.

Group Review

The contribution to JC&C's underlying profit attributable to shareholders by business segments was as follows:  

† The accounts have been restated due to changes in accounting policies upon adoption of IFRS 16 Leases, as set out in Note 1 to the condensed financial statements

Astra

Astra reported a net profit equivalent to US$691 million, under Indonesian accounting standards, 6% lower in its local currency terms. This was mainly due to lower contributions from its automotive and agribusiness divisions, which more than offset increased contributions from the financial services and heavy equipment, mining, construction and energy divisions.

Net income from Astra's automotive division fell by 18% to US$244 million, mainly due to lower car sales volumes and increased manufacturing costs. Highlights were as follows:

·; Astra's car sales were 6% lower at 253,000 units with the overall wholesale car market declining by 13% to 482,000 units; Astra's market share increased from 48% to 53%; 8 new models and 2 revamped models were launched.

·; Astra's Honda motorcycle sales were 8% higher at 2.4 million units as the wholesale motorcycle market grew by 7% in the first half of 2019 to 3.2 million units; and 4 new models and 15 revamped models were launched.

·; Components business Astra Otoparts reported a 19% increase in net income at US$17 million, mainly due to higher revenue from the replacement market and export segments.

Financial Services

Net income from Astra's financial services division grew by 32% to US$199 million mainly due to the recovery of non-performing loans, lower loan loss provisions and a larger loan portfolio. Highlights were as follows:

·; Consumer finance businesses saw a 6% increase in the amount financed to US$3.0 billion. The net income contribution from the car-focused finance companies increased by 39% to US$50 million, mainly due to lower non-performing loan losses while the net income contribution from the motorcycle-focused financing business increased by 10% to US$87 million, due to a larger loan portfolio.

·; Heavy equipment-focused finance operations saw a 4% decrease in the amounts financed at US$151 million. The net income contribution grew 32% to US$4 million, with lower loan provisions.

·; Permata Bank reported a significant increase in net income to US$50 million, mainly due to higher recoveries from non-performing loans.

·; General insurance company, Asuransi Astra Buana, reported 9% growth with net income at US$38 million, due to increased investment income.

Heavy Equipment, Mining, Construction and Energy

Net income from Astra's heavy equipment, mining, construction and energy division increased by 2% to US$235 million, mainly due to the contribution from the new gold mining operation, partly offset by lower heavy equipment sales. Highlights were as follows:

·; United Tractors reported a 2% increase with net income at US$393 million.

·; Komatsu heavy equipment sales decreased by 20% to 1,917 units while parts and service revenues were stable.

·; Mining contracting operations recorded a 5% higher overburden removal volume at 469 million bank cubic metres and a 7% higher coal production at 61 million tonnes.

·; Coal mining subsidiaries achieved 11% higher coal sales at 5 million tonnes, including 674,000 tonnes of coking coal sales.

·; Agincourt Resources reported gold sales of 194,000 oz.

·; General contractor, Acset Indonusa, reported a US$28 million net loss compared to a net income of US$5 million in the equivalent period last year, mainly due to increased project and funding costs for several ongoing contracts.

Infrastructure and Logistics

Net income from Astra's infrastructure and logistics division increased significantly to US$6 million, compared with the same period in 2018, due to improved earnings from its operational toll roads. Highlights were as follows:

·; Astra has 339km of operational toll roads along the Trans-Java network and a further 11km under construction.

·; There was an increase in revenue due to 23% higher traffic volumes for all operational concessions, following the completion of the Trans-Java network in December 2018.

·; In May 2019, a 44.5% interest was acquired in the 36km Surabaya-Mojokerto toll road, further strengthening Astra's portfolio in the Trans-Java network.

·; Serasi Autoraya's net income decreased by 20% to US$6 million, due to a 6% fall in vehicles under leasing contract at 22,200 units and 5% lower used car sales at 15,200 units.

Agribusiness

Net income from Astra's agribusiness division fell by 94% to US$2 million, due to an 18% fall in crude palm oil prices. 

Information Technology

Net income from Astra's information technology division fell by 35% to US$3 million due to reduced revenue in IT solutions and office services business and higher operating costs.

Property

Net income from Astra's property division was 33% lower at US$2 million, mainly due to reduced development earnings from Anandamaya Residences following the completion of construction in 2018.

Direct Motor Interests

The Group's Direct Motor Interests contributed a profit of US$55 million, 22% down on the previous year primarily due to a lower contribution from Truong Hai Auto Corporation ("Thaco"). Highlights were as follows:

·; Cycle & Carriage Singapore contributed a profit of US$29 million, 7% higher than the previous year with the increase in overall vehicle sales partly offset by lower margins due to higher certificates of entitlement ("COE") costs. The passenger car market fell by 7% to 39,900 units, following a decrease in the number of COEs. CCS passenger car sales grew by 15% to 8,000 units, due to the launch of new models and competitive pricing, leading to an increase in its market share from 16% to 20%.

·; In Malaysia, Cycle & Carriage Bintang contributed a loss of US$1 million to JC&C's underlying profit, compared to a profit of US$1 million in the first half of 2018 as overall unit sales declined, and operating expenses and financing costs were higher.

·; In Indonesia, Tunas Ridean contributed US$10 million to JC&C's underlying profit, 9% higher than the first half of 2018, due to a stronger contribution from its automotive operations, partially offset by a lower contribution from its rental business while the contribution from consumer finance was stable.

·; In Vietnam, Thaco contributed US$23 million to JC&C's underlying profit, 39% lower than the equivalent period last year, due to lower unit sales and margins which reflected the increased competition in the Vietnamese automotive market, particularly from completely built up ("CBU") imports.

Other Strategic Interests

The Group's Other Strategic Interests contributed a profit of US$44 million, 7% up on the previous year. Highlights were as follows:

·; Siam City Cement contributed a profit of US$12 million, down 8%, as improved domestic performance was offset by a lower contribution from its regional operations, primarily from Vietnam.

·; Refrigeration Electrical Engineering Corporation's contribution of US$4 million, based on its first quarter results as in the previous year, was 5% down. Weaker performances from its power and water investments and its M&E business were partially offset by stronger real estate contributions.

·; Vinamilk which is accounted for as an investment produced a dividend income of US$28 million, compared to US$24 million in the previous year. Vinamilk reported a net profit of US$244 million in the first half, 6% up in local currency terms, due to the rebound of the fast-moving consumer goods sector as well as an increase in market share.

Corporate Costs

Corporate costs were US$18 million compared to US$54 million in the previous year which has improved the underlying profit of the Group overall. This was primarily due to a foreign exchange gain from the translation of foreign currency loans in the first half of 2019 compared to a foreign exchange loss in the previous year, partly offset by higher net financing charges and overheads in the first half of 2019.

People

Alex Newbigging will be stepping down from his role as Group Managing Director with effect from 30th September 2019 and moving on to a new role within the Jardine Matheson Group. I would like to thank Alex for his contributions to the Group. Ben Birks, who is currently Chief Executive Officer of Jardine International Motors Limited, will succeed Alex Newbigging on 1st October 2019 as Group Managing Director.

Outlook

The outlook for the rest of the year remains cautious, with Astra expected to continue to face a soft automotive market and commodity prices. The Group's Direct Motor Interests will also continue to be affected by challenging market conditions, while the contribution from Other Strategic Interests is expected to be stable.

Ben Keswick

Chairman

CORPORATE PROFILE

Jardine Cycle & Carriage ("JC&C" or "the Group") is the investment holding company of the Jardine Matheson Group in Southeast Asia. With an investment strategy focused on urbanisation and the growing middle class in the region, JC&C holds long-term, strategic interests in diversified market-leading businesses across Southeast Asia.

The Group has a 50.1% interest in Astra, a diversified group in Indonesia, which is also the largest independent automotive group in Southeast Asia.

JC&C also has significant interests in Vietnam, including 26.6% in Truong Hai Auto Corporation, 24.9% in Refrigeration Electrical Engineering Corporation and 10.6% in Vinamilk. Its 25.5%-owned Siam City Cement also has a presence in South Vietnam, in addition to operating in Thailand, Cambodia and Bangladesh.

The other investments in JC&C's portfolio are the Cycle & Carriage businesses in Singapore, Malaysia and Myanmar, and 46.2%-owned Tunas Ridean in Indonesia. These motor businesses are managed by Jardine International Motors.

JC&C is a leading Singapore-listed company, 75%-owned by the Jardine Matheson Group. Together with its subsidiaries and associates, JC&C employs more than 250,000 people across Southeast Asia.

Statement pursuant to Rule 705(5) of the Listing Manual

The directors confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the accompanying unaudited interim financial results for the six months ended 30th June 2019 to be false or misleading in any material respect.

On behalf of the Directors

Ben Keswick

Director

Vimala Menon

Director

2nd August 2019

(1) Fair value through other comprehensive income ("FVOCI")

For the three months ended 30th June 2019

For the six months ended 30th June 2019